Mr COMBET (Parliamentary Secretary for Defence Procurement) (5:42 PM)
—I rise to speak on the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 in this cognate debate. This bill is of relevance and of vital interest to the people in my electorate and in the Hunter region more generally—as well as, of course, to the nation. In my electorate there are quite a number of underground coalmines and there is also one of the largest coal-fired electricity generation stations in New South Wales. And, of course, in the Hunter region there is a very important aluminium smelting capacity. That is an industry that uses a lot of electricity in the manufacturing of aluminium. Greenhouse gas emissions and how the government deals with them is of immediate economic and social relevance to my electorate and the people of the region.

The amendments contained in the bill will enable carbon dioxide to be stored safely and securely in geological storage formations deep underground in Australian offshore waters under the Commonwealth’s jurisdiction. The government is committed to comprehensive action—as the House has been informed on a number of occasions—to tackle climate change whilst also recognising the importance of supporting Australian jobs and the community. To bring it back to local and regional relevance in my area, the role of the coal industry and electricity generation distribution and retailing are extremely important for living standards and employment. That is why it is such an important issue, and close examination of the government’s policy responses is constantly under discussion.

I think it is well appreciated now that climate change is one of the greatest threats that the nation faces. Carbon capture and storage, or CCS—which is the subject of the bill—holds great potential as one important method, amongst a number of strategies, for avoiding the damaging effects of the emission of carbon dioxide and other greenhouse gases into the atmosphere. That is why this is a significant bill before the House. Geological surveys have indicated that storage formations in offshore waters made available by these amendments have the potential to securely store hundreds of millions of tonnes of carbon dioxide for many thousands of years. If successfully developed, carbon capture and storage has the potential to significantly reduce Australia’s greenhouse gas emissions whilst allowing for the continued use of fossil fuel.

This bill focuses on establishing a framework of access and property rights for greenhouse gas injection and storage activities in Commonwealth offshore waters. The bill also provides a management system for ensuring that storage is safe and secure. The types of geological formations—and I have some interest in this myself, having trained as a mining engineer—that have stored oil and gas for millions of years are the same as the logical storage formations for carbon dioxide. That implies that petroleum and greenhouse gas operations are therefore likely to operate in similar regions. It is important that this bill balances the rights of the new carbon storage industry with the rights of the petroleum and energy industry in particular. Accordingly, the legislation provides greenhouse gas injection and storage proponents with the certainty that is needed to invest, which is ultimately the key to enabling the technology, if it is found to be feasible, to work. Secondly, it preserves the pre-existing rights of the petroleum industry, as much as is practicable, to minimise sovereign risk to existing titleholders’ investment in Australia’s offshore resources. Importantly, the bill also provides for the release of areas for exploration in Commonwealth offshore waters for greenhouse gas injection and storage sites. Of course, this activity will have to be commercialised for it to be effective. The impact on other users of these areas will be considered. If the identified area is considered safe and secure, the legislation provides for the injection and storage of greenhouse gases at a rate and volume agreed by the responsible Commonwealth minister.

It is very important to put the legislation into a broader context. The scientific consensus is that the earth has been warming and that the release of greenhouse gases into the atmosphere is the main cause, and that, if we continue on this course, we will run into dangerous climate change that may threaten the established patterns of life. If we do nothing, as we have been informed by the work of Professor Garnaut, the middle-of-the road impacts are in the region of a 4.8 per cent cut in GDP by the end of this century. That is a reduction of $400 billion in today’s money. There is also a projected 4.5-degree increase in Australia’s mean temperature by 2100. On these trends, 5½ million Australians may be exposed to dengue fever virus by 2100. There will be 4,000 extra heat related deaths per year by 2100. The value of irrigated agriculture grown in the Murray-Darling Basin by 2100 would decline by no less than 92 per cent. These are the projections referred to by Professor Garnaut in his research, and to this point in time I have not heard a credible argument placed against them.

The central method of avoiding catastrophic climate change is to reduce our greenhouse gas emissions. The government has set a goal of a reduction of 60 per cent in the 2000 level of emissions by 2050. The most efficient method of reducing these emissions is an emissions trading system or, as the government describes it, a Carbon Pollution Reduction Scheme. It is understandable, I guess, that some people will ask why the Rudd Labor government is considering introducing a Carbon Pollution Reduction Scheme while some of the largest global emitters are not. In other words, why does Australia need to act early? This is another issue that was addressed by Professor Garnaut in his work. The short answer is that Australia is not that early at all. As Professor Garnaut argued, by number, more developed countries are already doing quite a lot more. That is not to say that there are more developed countries in Europe than elsewhere. Quite a lot of developed countries are doing a lot more. Even though the United States, at a national level, is not acting to mitigate greenhouse gas emissions, the reality is that some of the US states—some much bigger than Australia in terms of population and economic activity in some sectors, including states such as California—have in fact done a lot, and that has been reflected in greatly reduced greenhouse gas emissions in those parts of the US.

Another important point is that it is unlikely that we will get the developing nations to commit to reducing their emissions unless the developed world and countries such as Australia begin this process. That, of course, was what the Kyoto protocol was all about. It is essential that China in particular becomes part of a serious international mitigation effort, and much earlier than the current international discussion currently contemplates. That, of course, is an important goal. Professor Garnaut was also right when he noted that our location, compared to other developed nations such as Canada and the northern areas of the United States, means that Australia has a bigger interest than many other developed countries in a strongly mitigative outcome. We are already a hot and dry country, and small variations in temperature and rainfall do have a much bigger impact here than in other developed countries. As important is the fact that, unlike other developed countries, our neighbours are mainly developing countries—in some respects some of the most fragile nations in the world. The problems of our neighbours in these circumstances would inevitably also become our problems.

While a number of opposition speakers that I have heard contributing to the debate have pointed to Australia’s relatively small overall contribution to greenhouse gas emissions internationally, it is the case that whatever Australia does is important and that it does matter. Professor Garnaut made the point that Australia has been punching above its weight on climate change for the last seven years—however, not in a good way. Any discussion of climate change policy in the US over these years highlighted Australia more than almost any other developed country for the fact that we had not signed up to the Kyoto protocol and were not taking steps that others were taking. We were the reason why the Bush administration was able to say, ‘We’re not alone amongst developed countries.’ I think it is fair to say that that was a relevant factor in some of the US domestic debate. Fortunately, that situation has now ended. As Professor Garnaut said, without early and strong action some time before 2020, we will realise that we have indelibly surrendered to forces beyond our control. Delaying now will eliminate attractive lower cost options to reduce emissions.

Reducing carbon pollution from fossil fuels has to be a central part of Australia’s efforts to minimise the impact of climate change. The burning of fossil fuels for power generation accounts for one-third of humanity’s total emissions of greenhouse gas to the atmosphere—no less than one-third. Most forecasts of Australian and global energy production and use predict heavy fossil fuel use continuing for many years to come. The Stern review, for example, forecast that fossil fuels would still account for a majority of energy production in 2050 and well beyond.

This means it is essential that we decouple carbon pollution from fossil fuel based energy production. Carbon capture and storage technologies are the important mechanisms by which this decoupling can occur. Studies have found that carbon capture and storage can reduce emissions from fossil fuel use by 80 to 85 per cent. That is the sort of quantum leap that is required to achieve deep cuts in global emissions.

The need to capture carbon has very important regional dimensions. For example, as I indicated in opening, the coal industry in the Hunter region has been the heart of economic activity since European colonisation in the area. The Hunter coal industry is now worth $6 billion a year, with nearly 90 million tonnes exported each year. With significant growth projections, the current level of exports is making up 90 per cent of the region’s exports—90 per cent gives a reasonable indication of its economic significance. The current level of exports also makes up nearly 30 per cent of New South Wales’ total exports. As I said, with increased port capacity in Newcastle and current levels of demand, the projections are that the level of coal exports is set to increase quite significantly in coming years.

The industry in the Hunter directly employs 7,000 people, with another 21,000 in related employment. Many of these employees and their families live in my electorate. The region also produces over 35 per cent of Australia’s aluminium. Its four power stations in the Hunter and Central Coast regions generate 80 per cent of New South Wales’s electricity. It is evident from those statistics just how important the examination of the policy responses to climate change is for the Hunter region. This is why people in the region take a very keen interest in these issues and why the question of carbon capture and storage in a region heavily dependent on coal exports and coal-fired electricity generation is vital. Emissions from the stationary energy sector, of which coal-fired power stations are the dominant energy source, represent more than 50 per cent of our greenhouse gas emissions, and this share is growing. It is in this context that this parliament needs to consider this bill.

The need for policy intervention is absolutely clear. In particular, I was very pleased that Labor took to the last election a commitment to establish a $500 million clean coal technology fund. The government has established two new bodies to drive the deployment of low-emission coal technologies in Australia. One is the National Low Emissions Coal Council and the other is the carbon storage task force. In addition, industry and state governments are committing more than $1 billion.

I applaud the important initiatives of the New South Wales government as well, including a pilot project to capture postcombustion carbon dioxide from the Lake Munmorah power station. This power station is just down the road from my electorate. The Eraring power station is in my electorate. Furthermore, the coal industry, through the COAL21 program, has levied itself 20c per tonne of coal production per year to fund carbon capture and storage and related technologies. The levy is estimated to be worth $1 billion over 10 years. The CFMEU—the coalminers union—has proposed that the Australian coal industry, through this program, should increase its levy on itself from 20c per tonne to $1 per tonne. This would increase the COAL21 fund by a factor of five to around $5 billion over the coming decade. They have that view because they understand the necessity for investment in the investigation of carbon capture and storage and other technologies to address greenhouse gas emissions. These sorts of investments will complement investments in renewable energies. For example, the $150 million Energy Innovation Fund will boost Australia’s existing momentum in solar technology research, while the $500 million Renewable Energy Fund will accelerate the commercialisation of new renewable energy technologies.

Australia also possesses amazing potential for geothermal energy production, and the government is committed to renewable energy representing a 20 per cent share in Australia’s electricity supply by 2020. If it can be developed and commercialised, geothermal energy production can play an extremely important role in achieving that outcome. The renewable energy industry can develop and invest with confidence in these circumstances.

Nevertheless, for the reasons I have described, the government recognises the vital importance that the coal industry specifically, and fossil fuels in general, will continue to represent to Australia for some time to come. Again, I emphasise the importance of it in my region. As a former coalmining engineer, and with a strong commitment to the industry, I am particularly interested, as a member of parliament, to see this particular technology successfully evolved.

This bill will help develop the carbon capture and storage industry. The successful development of the technology will massively reduce greenhouse gas emissions from coal and gas. As I referred to a moment ago, the CFMEU, the coalminers union, has done a lot of work in this area, for which I congratulate it. At times, unions are accused of not looking positively towards future policy positions. Certainly, the CFMEU has distinctly not had that approach in relation to the issue of climate change. The president of the union, Tony Maher, who I know well, has been a leader in the debate on these particular matters. He and his organisation have highlighted three positive outcomes of the industrialisation of carbon capture and storage technology, with which I concur.

The three positive outcomes that can emanate from the development of this technology include, firstly, a substantial contribution to avoiding the risk of global temperature rises that would cause widespread species and ecosystem loss and extreme weather conditions that could threaten many human communities. The second outcome is that the development of carbon capture and storage technology will enable growth in energy use to continue in a carbon constrained world and thereby enable economic growth to continue. This is especially important for developing countries that have legitimate and appropriate aspirations for substantial economic growth to give their citizens a better quality of life. The third positive outcome is that the technology will allow Australia to maintain its coal industry, which is a major engine of economic growth and wellbeing in regional Australia, the source of significant exports and a key component of Australia’s competitive advantage in energy-intensive manufacturing. That is a critical economic imperative for the House to consider. I hope we can ensure the safe passage of this legislation through the parliament to provide secure rights in relation to the development of carbon capture and storage technology.